<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
<TABLE>
<S> <C>
/ / Preliminary Proxy Statement / / Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
</TABLE>
U.S.B. Holding Co., Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), or 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
------------------------------------------------------------------------
<PAGE> 2
U.S.B. HOLDING CO., INC.
100 DUTCH HILL ROAD
ORANGEBURG, NEW YORK 10962
------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
------------------------
MAY 22, 1996
To the Shareholders of U.S.B. Holding Co., Inc.:
At the direction of the Board of Directors (the "Board") of U.S.B. Holding
Co., Inc., a Delaware corporation (the "Company"), NOTICE IS HEREBY GIVEN that
the Annual Meeting of Shareholders of the Company will be held at the Comfort
Inn, 425 East Route 59, Nanuet, New York 10954 on May 22, 1996 at 10:00 a.m.
(local time), for the purpose of considering and voting upon the following
matters:
1. Election of two directors, constituting Class II members of the
Board, to a three-year term of office.
2. Any other business which may be properly brought before the meeting
or any adjournment thereof.
By order of the Board of Directors
/s/ Michael H. Fury
-------------------------
Michael H. Fury, Secretary
April 15, 1996
YOU ARE REQUESTED TO MARK, SIGN, DATE AND RETURN THE ENCLOSED PROXY AS
PROMPTLY AS POSSIBLE, WHETHER YOU PLAN TO ATTEND THE MEETING IN PERSON OR NOT.
YOU MAY REVOKE YOUR PROXY AT ANY TIME PRIOR TO THE MEETING, OR IF YOU ATTEND THE
MEETING YOU MAY REVOKE YOUR PROXY AT THAT TIME, IF YOU WISH.
<PAGE> 3
U.S.B. HOLDING CO., INC.
100 DUTCH HILL ROAD
ORANGEBURG, NEW YORK 10962
------------------------
PROXY STATEMENT
FOR ANNUAL MEETING OF SHAREHOLDERS
MAY 22, 1996
This Proxy Statement and the accompanying form of proxy are being sent to
the shareholders of U.S.B. Holding Co., Inc., a Delaware corporation (the
"Company"), in connection with the solicitation by the Board of Directors of the
Company of proxies to be voted at the Annual Meeting of Shareholders of the
Company (the "Meeting") to be held at 10:00 a.m. (local time) on Wednesday, May
22, 1996, at the Comfort Inn, 425 East Route 59, Nanuet, New York 10954, and at
any adjournments thereof. The Notice of Meeting, this Proxy Statement and the
accompanying form of proxy are being mailed to the shareholders on or about
April 15, 1996. The Annual Report of the Company for the year 1995 is also
furnished to shareholders with this Proxy Statement.
At the Meeting, two directors, constituting Class II members of the Board,
will be elected to the Board of Directors to serve for a three-year term (until
the 1999 Annual Meeting of Shareholders), with each director to hold office
until his successor has been duly elected and qualified, or until his earlier
death, resignation or removal.
VOTING RIGHTS AND PROXIES
The Board of Directors of the Company has fixed the close of business on
April 8, 1996, as the record date for determination of shareholders entitled to
notice of, and to vote at, the Meeting. At the close of business on such date,
there were outstanding and entitled to vote 2,802,833 shares of common stock, $5
par value per share ("Common Stock"), which is the Company's only authorized and
outstanding class of stock entitled to vote at the Meeting.
A majority of the outstanding shares of Common Stock is required to be
represented at the Meeting, in person or by proxy, to constitute a quorum. Each
outstanding share of Common Stock is entitled to one vote. There will be no
cumulative voting of shares for any matter voted upon at the Meeting. Directors
are elected by a plurality of the votes cast. Abstentions and broker nonvotes
will be disregarded and have no effect on the outcome of the election of
directors.
If the enclosed form of proxy is properly executed and returned to the
Company prior to or at the Meeting and is not revoked prior to its exercise, all
shares represented thereby will be voted at the Meeting and, where instructions
have been given by a shareholder, will be voted in accordance with such
instructions.
Any shareholder executing a proxy which is solicited hereby has the power
to revoke it prior to exercise of the authority conferred thereby. Revocation
may be made effective by attending the Meeting and voting the shares of stock in
person or by delivering to the Secretary of the Company at the principal offices
of the Company prior to exercise of the Proxy a written notice of revocation or
a later-dated, properly executed proxy.
<PAGE> 4
The solicitation of proxies will be by mail, but proxies also may be
solicited by telephone, telegram or in person by directors, officers and other
employees of the Company or of Union State Bank (the "Bank"), the Company's
principal subsidiary. The Company will bear all costs of soliciting proxies.
Should the Company, in order to solicit proxies, request the assistance of other
financial institutions, brokerage houses or other custodians, nominees or
fiduciaries, the Company will reimburse such persons for their reasonable
expense in forwarding proxy materials to shareholders and obtaining their
proxies.
Under the laws of the State of Delaware, the state of incorporation of the
Company, a shareholder dissenting with respect to any of the matters proposed to
be acted upon, whether dissenting in writing, by failing to vote or by voting
against the proposals, or otherwise dissenting, is not entitled to have his
shares appraised and paid for by the Company.
ITEM 1: ELECTION OF DIRECTORS
Two directors, Mr. Fred F. Graziano, M.D. and Mr. Kenneth J. Torsoe,
constituting Class II members of the Board of Directors, are proposed to be
elected to serve for a three-year term (until the 1999 Annual Meeting of
Shareholders), with each to hold office until his successor shall have been duly
elected and qualified, or until his earlier death, resignation or removal.
The Company's Certificate of Incorporation provides for a classified Board
of Directors consisting of three classes of directors, as nearly equal in number
as possible, with terms expiring in successive years. There are currently two
Class II directors with terms expiring at this meeting, two Class III directors
with terms expiring in 1997 and two Class I directors with terms expiring in
1998, making a total of six directors.
All proxies which are timely received in proper form will be voted FOR the
Board's nominees for director, unless contrary instructions are given. All
nominees are presently directors of the Company. If any nominee is unable to
serve, the Board of Directors may designate a substitute nominee, in which event
the votes which would have been cast for the nominee not serving will be cast
for the substitute nominee.
2
<PAGE> 5
The following information is furnished with respect to each of the Board's
nominees for Class II director, and the Class I and Class III directors
continuing in office.
NOMINEES FOR DIRECTOR
CLASS II
(TERMS EXPIRING IN 1999)
<TABLE>
<CAPTION>
NAME, AGE, OTHER POSITIONS WITH THE COMPANY SERVED AS A
OR THE BANK AND PRINCIPAL OCCUPATION FOR THE PAST FIVE YEARS DIRECTOR SINCE
- -------------------------------------------------------------------------------- --------------
<S> <C>
FRED F. GRAZIANO, M.D., 75...................................................... 1982
Licensed physician in State of New York; offices in Nanuet, NY; Treasurer of the
Bank
KENNETH J. TORSOE, 60........................................................... 1982
President, Torsoe Brothers Construction Corp., Suffern, NY; partner, Normandy
Village Company; owner, Normandy Village Apts., Nanuet, NY
</TABLE>
DIRECTORS CONTINUING IN OFFICE
CLASS III
(TERMS EXPIRING IN 1997)
<TABLE>
<CAPTION>
NAME, AGE, OTHER POSITIONS WITH THE COMPANY SERVED AS A
OR THE BANK AND PRINCIPAL OCCUPATION FOR THE PAST FIVE YEARS DIRECTOR SINCE
- -------------------------------------------------------------------------------- --------------
<S> <C>
MICHAEL H. FURY, 68............................................................. 1982
Attorney, partner in law firm of Fury & Kennedy, Pearl River, NY; Secretary and
General Counsel of the Company and the Bank
THOMAS E. HALES, 59............................................................. 1982
Chairman of the Board and Chief Executive Officer of the Company (from 1982);
Chairman of the Board of the Bank (from 1981); Chief Executive Officer of the
Bank (from 1983); President of the Company and the Bank (from 1984)
</TABLE>
CLASS I
(TERMS EXPIRING IN 1998)
<TABLE>
<CAPTION>
NAME, AGE, OTHER POSITIONS WITH THE COMPANY SERVED AS A
OR THE BANK AND PRINCIPAL OCCUPATION FOR THE PAST FIVE YEARS DIRECTOR SINCE
- -------------------------------------------------------------------------------- --------------
<S> <C>
HERBERT PECKMAN, 84............................................................. 1982
Proprietor, Peckman's Liquor Store, Pearl River, NY
HOWARD V. RUDERMAN, 67.......................................................... 1982
President, Mohegan Electric Supply Co., Mohegan Lake, NY
</TABLE>
EXECUTIVE OFFICERS
In addition to Mr. Hales, the Executive Officers of the Company are Robert
F. Picarelli, 60, Executive Vice President of the Company and the Bank since
1987; Raymond J. Crotty, 48, Executive Vice President,
3
<PAGE> 6
Assistant Secretary, and Chief Credit Officer of the Company since March 22,
1995; and Steven T. Sabatini, 44, Executive Vice President, Assistant Secretary,
and Chief Financial Officer of the Company since March 22, 1995 (acting Chief
Financial Officer from February 27, 1995 until March 22, 1995). Messrs. Crotty
and Sabatini also hold the same positions with the Bank. Mr. Crotty has held
such position with the Bank since 1992, and has also been a director of the Bank
since June 1995. Prior to 1992, Mr. Crotty was a Senior Vice President and Chief
Credit Officer of the Bank since 1988. Mr. Sabatini was Assistant to the
Chairman of the Board of Directors of the Bank from September 1994 to March
1995, and for five years prior to that, an audit partner with Ernst & Young LLP.
BOARD COMMITTEES AND MEETINGS
The Board of Directors of the Company met 12 times during 1995. The only
standing committee of the Board is the Stock Option Committee, comprised of
Messrs. Ruderman (Chairman), Fury and Peckman. The Board of Directors of the
Company does not have a standing executive, audit, nominating or compensation
committee or committees performing similar functions.
Each of the directors of the Company is also a director of the Bank, which
is the Company's principal subsidiary. In addition, Mr. Raymond J. Crotty,
Executive Vice President, was elected Director of the Bank in June 1995. Among
its standing committees, the Board of Directors of the Bank has an Executive
Committee, an Examining Committee, a Compensation Committee and an
Asset/Liability Committee.
The Executive Committee of the Bank's Board of Directors supervises the
day-to-day business of the Bank, but does not have authority to act on matters
which are not within the ordinary course of business. The committee's present
voting members are Messrs. Torsoe (Chairman), Graziano, Fury, Ruderman, Peckman,
Crotty and Hales.
The Examining Committee of the Bank's Board of Directors serves many of the
purposes which would be served by an audit committee. It reviews the Bank's
internal auditing and control procedures and reviews and makes recommendations
concerning internal accounting controls. Its present members are Messrs.
Ruderman (Chairman), Peckman and Graziano.
The Compensation Committee of the Bank's Board of Directors establishes and
reviews the policies and standards for hiring employees and makes
recommendations to the Bank's Board concerning hiring, promotions and salary
adjustments. Its present members are Messrs. Ruderman (Chairman), Fury and
Peckman.
The Asset/Liability Committee of the Bank's Board of Directors establishes
and reviews the Bank's policies and standards for investments and makes
recommendations to the Bank's management on investment matters. Its present
members are Messrs. Torsoe (Chairman), Fury, Crotty, Hales, and Graziano.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT
Pursuant to Section 16(a) of the Securities Exchange Act of 1934 and the
Rules issued thereunder, the Company's directors and Executive Officers are
required to file with the Securities and Exchange Commission ("SEC") reports of
ownership and changes in ownership of Common Stock. Copies of such forms are
required to be filed with the Company. Based soley on its review of copies of
such reports furnished to the Company, the Company is aware that some ownership
reports filed by directors and Executive Officers during 1995 were not filed on
a timely basis, but believes that the directors and Executive Officers were in
substantial compliance with the filing requirements by the end of 1995.
4
<PAGE> 7
COMPENSATION OF DIRECTORS
Each director of the Company during 1995 received $1,100 for each meeting
of the Company's Board of Directors from January through June 1995 and $2,500
per meeting beginning in July 1995. In addition, each director of the Bank
received $1,900 for each meeting of the Bank's Board of Directors from January
through June 1995, and $500 per meeting beginning in July 1995. No compensation
is paid to directors for serving on or attending meetings of the committees of
the Company's or Bank's Board of Directors.
DIRECTOR STOCK OPTION PLAN
Under the Company's Director Stock Option Plan, each non-employee director
automatically receives annually, effective as of the close of each annual
meeting of shareholders of the Company, a non-qualified option to purchase a
fixed number of shares of Common Stock at an exercise price equal to the market
value of such shares on the date of the grant . Under the plan adopted by the
Board in 1994, and amended with shareholder approval in 1995, each eligible
director currently receives an option (after adjustment for stock splits and
dividends) covering 3,850 shares of Common Stock annually. The options may not
be exercised prior to the first anniversary of the date of grant and expire ten
years after the date of grant. At December 31, 1995, options (after adjustment
for stock splits and dividends) had been granted under the plan for 82,623
shares, of which options for 26,448 shares had been exercised and options for
56,175 shares (of which 36,925 were immediately exercisable) were outstanding.
5
<PAGE> 8
OWNERSHIP OF SHARES BY MANAGEMENT
The following table sets forth certain information as of April 8, 1996
regarding the amount of Common Stock beneficially owned by the Company's
directors and director nominees, the Executive Officers listed below under
EXECUTIVE COMPENSATION, and all directors and Executive Officers as a group:
<TABLE>
<CAPTION>
NUMBER OF SHARES
AND NATURE OF PERCENT
BENEFICIAL OWNER BENEFICIAL OWNERSHIP* OF CLASS
--------------------------------------------------------- --------------------- --------
<S> <C> <C>
Raymond J. Crotty(a)..................................... 33,302 1.17
Michael H. Fury(b)....................................... 62,629 2.22
Fred F. Graziano, M.D.(c)................................ 77,260 2.75
Thomas E. Hales(d)....................................... 427,718 14.63
Herbert Peckman(e)....................................... 57,487 2.04
Robert F. Picarelli(f)................................... 56,561 1.98
Howard V. Ruderman(g).................................... 158,323 5.63
Kenneth J. Torsoe(h)(i).................................. 296,036 10.54
Steven T. Sabatini(j).................................... 9,136 .32
All directors and executive officers as a group (9
individuals)........................................... 1,178,452 38.38
</TABLE>
- ---------------
* The table shows all shares as to which each named beneficial owner
possessed sole or shared voting or investment power as of the specified
date, including shares held by, in the name of, or in trust for the spouse
and dependent children of the named individual and other relatives living
in the same household, even if beneficial ownership of such shares has been
disclaimed by the named individual. Unless otherwise indicated, the named
beneficial owner was the sole and exclusive owner of all listed shares as
of the specified date. The table does not include that portion of the
268,508 shares owned by the Company's Employee Stock Ownership Plan (With
401(k) Provisions) (the "KSOP"), of which Mr. Peckman and Mr. Sabatini are
trustees, nor that portion of the 3,346 shares owned by the Bank's
Supplemental Employees' Investment Plan (the "SEIP") which may be allocated
to any named beneficial owner, of which Mr. Hales and Mr. Sabatini are
trustees.
(a) Includes 670 shares owned by Mr. Crotty jointly with his wife, and 32,632
shares that may be acquired pursuant to the exercise of options within 60
days of April 8, 1996. Does not include 16,081 or 186 shares allocated to
Mr. Crotty under the KSOP and SEIP, respectively.
(b) Includes 23,292 shares owned by Mr. Fury jointly with his wife, 1,323
shares which he holds as trustee for his children, and 16,964 shares that
may be acquired pursuant to the exercise of options within 60 days of April
8, 1996.
(c) Includes 44,346 shares held by Mr. Graziano's wife, and 10,940 shares that
may be acquired pursuant to the exercise of options within 60 days of April
8, 1996.
(d) Includes 122,652 shares owned by Mr. Hales jointly with his wife, 36,336
shares owned by his wife, 1,197 shares held by Mr. Hales as custodian for
his grandchildren (Michael T. Shaw, Robert W. Shaw, Christopher Hales
Wilson, and Thomas Prezziosi Wilson), 17,924 shares held by the Hales
Family Foundation, Inc., and 120,040 shares that may be acquired pursuant
to the exercise of options within 60 days of April 8, 1996. Does not
include 38,532 or 2,068 shares allocated to Mr. Hales under the KSOP and
SEIP, respectively.
6
<PAGE> 9
(e) Includes 12,948 shares that may be acquired pursuant to the exercise of
options within 60 days of April 8, 1996.
(f) Includes 5,394 shares owned by Mr. Picarelli jointly with his wife, and
50,169 shares that may be acquired pursuant to the exercise of options
within 60 days of April 8, 1996. Does not include 17,420 or 235 shares
allocated to Mr. Picarelli under the KSOP and SEIP, respectively.
(g) Includes 8,932 shares that may be acquired pursuant to the exercise of
options within 60 days of April 8, 1996.
(h) Includes 2,499 shares owned by Mr. Torsoe's son, and 6,391 shares that may
be acquired pursuant to the exercise of options within 60 days of April 8,
1996.
(i) If shares owned by Harold R. Torsoe were included, the total would be
511,786 shares (18.22%). Harold R. Torsoe is the brother of Kenneth J.
Torsoe. However, Kenneth J. Torsoe disclaims beneficial ownership of the
shares owned by his brother.
(j) Includes 8,250 shares that may be acquired pursuant to the exercise of
options within 60 days of April 8, 1996. Does not include 1,489 shares
allocated to Mr. Sabatini under the KSOP Plan.
7
<PAGE> 10
EXECUTIVE COMPENSATION
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following table sets forth cash and certain other compensation paid to
or earned by the Chief Executive Officer and the other Executive Officers of the
Company for the years indicated. The Bank, which is the principal subsidiary of
the Company, has paid or accrued all of the cash compensation shown.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION COMPENSATION
-------------------- ------------ ALL OTHER
NAME AND PRINCIPAL POSITION(S) YEAR SALARY(1) BONUS(2) OPTIONS(3) COMPENSATION(4)
- ----------------------------------------- ---- --------- -------- ------------ ---------------
<S> <C> <C> <C> <C> <C>
Thomas E. Hales.......................... 1995 $ 363,000 $559,620 22,000 $62,864
Chairman of the Board and 1994 $ 320,000 $420,000 22,000 $47,500
Chief Executive Officer 1993 $ 290,000 $372,000 15,059 $32,497
Raymond J. Crotty........................ 1995 $ 105,992 $ 93,270 8,250 $13,415
Executive Vice President and 1994 $ 87,000 $ 70,000 8,250 $ 5,960
Chief Credit Officer 1993 $ 87,000 $ 62,000 5,022 $ 4,497
Robert F. Picarelli...................... 1995 $ 99,622 $ 93,270 8,250 $12,815
Executive Vice President and 1994 $ 95,800 $ 70,000 8,250 $ 6,312
Chief Operations Officer 1993 $ 95,800 $ 62,000 5,022 $ 4,497
Steven T. Sabatini(5).................... 1995 $ 125,000 $ 30,635 8,250 $10,370
Executive Vice President and
Chief Financial Officer
</TABLE>
- ---------------
(1) Includes director fees in the case of Messrs. Hales and Crotty; also
includes that portion of each named executive's salary deferred pursuant to
the KSOP and SEIP (but not amounts contributed for the named executives by
the Company, which are included under "All Other Compensation").
(2) Reflects payments accrued for the indicated years under the Company's
Executive Compensation Plan.
(3) Number of shares covered by stock options granted, adjusted for stock
dividends.
(4) Reflects annual contributions made for the account of each named executive
to the KSOP and SEIP. Also reflects additional compensation each year for
Mr. Hales, representing certain lost benefits from the KSOP as a result of
IRS regulations.
(5) Mr. Sabatini was the acting Chief Financial Officer from February 27, 1995
until March 22, 1995, when he became Executive Vice President and Chief
Financial Officer of the Company and the Bank.
8
<PAGE> 11
The options referred to below were granted under the Company's 1984 and
1993 Incentive Stock Option Plans.
OPTION GRANTS IN 1995
<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE
AGGREGATE VALUE AT
% OF TOTAL ASSUMED ANNUAL
OPTIONS RATES OF STOCK
GRANTED TO PRICE APPRECIATION
EMPLOYEES EXERCISE FOR OPTION TERM*
OPTIONS IN FISCAL PRICE EXPIRATION -------------------
NAME GRANTED YEAR ($/SHARE) DATE 5% 10%
- -------------------------------------- ------- ---------- --------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Thomas E. Hales....................... 22,000 39.60% $ 25.75 6/14/00 $ 90,811 $262,945
Raymond J. Crotty..................... 8,250 14.85% $ 23.41 6/14/05 $121,460 $307,803
Robert F. Picarelli................... 8,250 14.85% $ 23.41 6/14/05 $121,460 $307,803
Steven T. Sabatini.................... 8,250 14.85% $ 23.41 6/14/05 $121,460 $307,803
</TABLE>
- ---------------
* The dollar gains under these columns result from calculations assuming 5% and
10% growth rates as set by the SEC and are not intended to forecast future
price appreciation of Common Stock of the Company over the option term, which
is ten years (five years in the case of Mr. Hales's options). The gains
reflect a future value based upon growth at these prescribed rates.
OPTION EXERCISES IN 1995 AND DECEMBER 31, 1995 VALUES
<TABLE>
<CAPTION>
VALUE
OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT
SHARES 12/31/95 12/31/95*
ACQUIRED VALUE (EXERCISABLE/ (EXERCISABLE/
NAME ON EXERCISE REALIZED UNEXERCISABLE) UNEXERCISABLE)
- --------------------------------------------- ----------- -------- -------------- -------------------
<S> <C> <C> <C> <C>
Thomas E. Hales.............................. None N/A 120,040/0 $1,658,218/$--
Raymond J. Crotty............................ None N/A 32,632/0 $ 420,521/$--
Robert F. Picarelli.......................... None N/A 50,169/0 $ 772,015/$--
Steven T. Sabatini........................... None N/A 8,250/0 $ 46,118/$--
</TABLE>
- ---------------
* Difference between the market value per share of the Company's Common Stock at
December 31, 1995 ($29.00) and the option exercise price, multiplied by the
number of shares covered by the options.
EMPLOYMENT AGREEMENT. The Company and the Bank are parties to an
employment agreement with Mr. Hales for a term of five years expiring July 1,
1999 covering his services as Chairman of the Board of Directors of the Company
and the Bank. The agreement provides for annual salary and other payments to Mr.
Hales of $370,000 as of July 1, 1995, increasing by $30,000 annually during the
term of the agreement, for annual stock option grants of 22,000 shares issued at
fair market value at the date of grant (110% of fair market value if Mr. Hales'
ownership of the Company equals or exceeds 10% at the date of grant), and for
other fringe benefits.
EXECUTIVE COMPENSATION PLAN. Under the Company's Executive Compensation
Plan, key officers are entitled to bonuses at varying percentages of the
Company's consolidated net income after taxes for the Company's fiscal year. The
aggregate amount of such additional compensation, as determined by the
9
<PAGE> 12
Compensation Committee of the Bank's Board of Directors, may not exceed 15% of
the consolidated net income after taxes for the Company's fiscal year.
OTHER BENEFIT PLANS. The Company has an Employee Stock Ownership Plan With
401(k) Provisions ("KSOP") for the purpose of providing additional compensation
and retirement benefits to employees. The 401(k) portion of the KSOP is intended
to qualify as a cash deferred compensation arrangement under Section 401(k) of
the Internal Revenue Code. All employees over 18 are eligible to participate
after one year of service. Eligible employees may elect to defer a portion of
their salary (not to exceed 15% on an annual basis) and contribute the same to
the KSOP. The Company may elect to match 50% of the employee's deferred salary
up to a maximum of 4% of the employee's annual salary. The Company may make
additional contributions out of its current or cumulative earnings as determined
annually by the Board of Directors. Participating employees may make additional
voluntary contributions to the KSOP, not to exceed 10% of their salary, which
are not matched by the Company. Participants may elect to invest their deferred
salary contributions, related Company match and additional voluntary
contributions in a fund which purchases Common Stock or in an investment fund.
Withdrawals and loans may be made by participating employees in certain limited
circumstances.
The Employee Stock Ownership portion of the KSOP provides an opportunity
for eligible employees to own Common Stock. Contributions to the KSOP made on
behalf of eligible employees by the Company are not taxable until a distribution
of benefits is actually received by the employee. The KSOP has a stock bonus
section and is designed to qualify for special tax treatment under Section
4975(e)(7) of the Internal Revenue Code. The KSOP has a graduated vesting period
which starts after the second year the employee becomes a participant. The
amounts of Common Stock allocated under the KSOP as a result of Company
contributions and forfeitures for 1995 to Messrs. Hales, Crotty, and Picarelli,
were 246 shares each, and for Mr. Sabatini, 231 shares.
The KSOP is administered by the Board of Directors and by trustees which
include Mr. Peckman and Mr. Sabatini.
During 1994, the Bank adopted a Supplemental Employees' Investment Plan
("SEIP") for certain salaried employees. The SEIP was established solely for the
purpose of providing, to certain management personnel who participate in the
KSOP, benefits attributable to contribution allocations which would otherwise be
made under the KSOP but for certain limitations designed to qualify the KSOP for
favorable treatment under the Internal Revenue Code. Under the SEIP, salary
reduction contributions may be made in excess of such limitations on annual
additions, imposed on the KSOP by Section 415 of the Internal Revenue Code, and
the Bank may elect to match fifty percent of the employee's contribution under
the SEIP. The Bank's matching contribution in 1995 was $31,000, of which $25,000
was allocated to Mr. Hales, and $3,000 each was allocated to Mr. Crotty, and Mr.
Picarelli.
10
<PAGE> 13
NOTWITHSTANDING ANYTHING TO THE CONTRARY SET FORTH IN ANY OF THE COMPANY'S
PREVIOUS FILINGS UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED, THAT MIGHT INCORPORATE FUTURE FILINGS,
INCLUDING THIS PROXY STATEMENT, IN WHOLE OR IN PART, THE FOLLOWING REPORT OF THE
BANK'S COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION AND THE PERFORMANCE
GRAPH SHALL NOT BE INCORPORATED BY REFERENCE INTO ANY SUCH FILINGS.
REPORT OF BANK'S COMPENSATION COMMITTEE
ON EXECUTIVE COMPENSATION
The proxy statement rules of the Securities and Exchange Commission require
a report from the Compensation Committee of the Board of Directors which
discusses the compensation policies for Executive Officers and the Committee's
rationale for compensation paid to the Chief Executive Officer. The Company's
Board of Directors does not have a Compensation Committee. All of the
compensation (other than stock options) paid to the Company's Executive Officers
is paid to them by the Bank, and decisions concerning the Chief Executive
Officer's compensation and guidelines for the compensation of the other
Executive Officers are made by the Compensation Committee of the Bank's Board of
Directors. Accordingly, the following report is submitted by the Bank's
Compensation Committee.
COMPENSATION POLICIES FOR EXECUTIVE OFFICERS
The Compensation Committee's executive compensation policies are designed
to provide competitive levels of compensation that align compensation with the
Company's annual and long-term performance goals, reward good performance at the
Company and Bank levels, recognize individual initiative and achievements and
assist the Company in attracting and retaining qualified executives. A
significant portion of an Executive Officer's compensation is performance
related, and therefore, actual compensation levels vary from year to year and in
any particular year may be above or below those of the Company's competitors.
The Compensation Committee also believes that stock ownership by management
of the Company is beneficial in aligning the interests of management and the
Company's shareholders. Accordingly, the Compensation Committee has relied upon
stock-based compensation arrangements in compensating the Company's Executive
Officers.
RELATIONSHIP OF COMPANY'S PERFORMANCE TO COMPENSATION
Compensation paid to the Company's Executive Officers for 1995 consisted
primarily of salary, annual bonus under the Company's Executive Compensation
Plan, and awards of stock options under the Company's 1993 Incentive Stock
Option Plan. While each Executive Officer's salary is determined on the basis of
the individual's responsibilities and a comparison with salaries paid by
competitors of the Company, the other primary components of executive
compensation are directly related to Company and Bank performance.
ANNUAL BONUS ARRANGEMENTS
Corporate performance determines the aggregate amount of annual bonuses, if
any, awarded to the Company's Executive Officers under the Executive
Compensation Plan. In determining the aggregate percent of consolidated net
income after taxes that is paid as bonuses in accordance with the Executive
Compensation Plan, the Compensation Committee considers the financial
performance of the Company in comparison to the Company's business plan for the
year, with particular emphasis on net income, return on average common equity,
return on average assets and expense to revenue ratios. The Compensation
Committee also considers
11
<PAGE> 14
certain measures of asset quality, including net charge-offs and the level of
nonperforming loans, and other specific items such as capital ratios that the
Board of Directors may have identified as being priorities for that year.
In 1995, the Committee took into account the fact that the Company achieved
the highest net income and earnings per share levels in its history. Net income
of $9.3 million and earnings per common and common equivalent share of $3.14
represented increases of 33% and 30%, respectively, over 1994. In addition, the
Company's risk-based capital position continued to strengthen as Tier I and
total capital ratios at year-end exceeded the "well capitalized" regulatory
minimums. The price of the Company's Common Stock rose 30% during 1995, while
the return on average assets was 1.42% and return on average common
stockholders' equity was 22.17% for the year.
Certain subjective factors, such as the achievement of qualitative goals
relating to customers and employees and the level of bonus payments at competing
organizations in light of their relative performance, are also considered. After
the Committee's evaluation of overall corporate performance, the individual
performance of each of the Executive Officers is evaluated by the Chairman of
the Board and reported to the Compensation Committee. Such evaluation is made in
light of the factors described above that are relevant to each Executive
Officer's responsibilities.
LONG-TERM INCENTIVE PLAN ARRANGEMENTS
The long-term incentive component of Executive Officers' compensation for
1995 consists of awards of stock options under the Company's Incentive Stock
Option Plans. The Plans are designed to link rewards for Executive Officers and
other key personnel to increases in shareholder value, foster share ownership by
the Company's Executives and enable the Company to retain and attract key
employees with superior management skills. Awards under the Plans each year take
into account performance during the prior year as measured by the factors
described above under the caption "Annual Bonus Arrangements" and the Company's
progress toward meeting longer-term objectives, emphasizing profitability and
capital strength. The options granted Mr. Hales in 1995, shown under the caption
"Stock Options Granted" in the Summary Compensation Table, reflect his high
level of individual performance and the Committee's view of the continuing
importance of his role in determining the future success of the Company. The
actual size of any stock option gains Mr. Hales and other Executives will
realize depends solely on the future performance of the Company's Common Stock.
The Committee believes that those programs described above provide
compensation that is competitive with the levels paid by other major
corporations, effectively links executive and shareholder interests through
equity based plans and is structured to provide incentives that are consistent
with the long-term investment horizons which characterize the business in which
the Company is engaged.
COMPENSATION COMMITTEE
Howard V. Ruderman, Chairman
Michael H. Fury
Herbert Peckman
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<PAGE> 15
PERFORMANCE GRAPH
The following graph provides a comparison of the annual percentage changes
in the cumulative total shareholder return on the Company's Common Stock with
that of a Peer Group* and the American Stock Exchange Market Value Index ("AMEX
Index") for the five-year period ending December 31, 1995. The comparison
assumes that $100 was invested on December 31, 1990 in the Common Stock of the
Company and in each of the foregoing indices, and assumes the reinvestment of
all dividends.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
AMONG U.S.B. HOLDING CO., INC., THE AMEX
MARKET VALUE INDEX AND A PEER GROUP
<TABLE>
<CAPTION>
MEASUREMENT PERIOD U.S.B. HOLD- AMEX MARKET
(FISCAL YEAR COVERED) ING CO., INC. PEER GROUP* VALUE
<S> <C> <C> <C>
1990 100.00 100.00 100.00
1991 90.19 94.51 128.22
1992 101.56 127.35 129.57
1993 181.76 164.40 154.86
1994 239.71 184.84 140.75
1995 308.50 254.34 177.93
</TABLE>
The dollar amounts in the foregoing graph and in the table below are as of
December 31 in each year indicated.
<TABLE>
<CAPTION>
1990 1991 1992 1993 1994 1995
<S> <C> <C> <C> <C> <C> <C>
U.S.B. Holding Co., Inc. $100.00 $ 90.19 $101.56 $181.76 $239.71 $308.50
Peer Group* $100.00 $ 94.51 $127.35 $164.40 $184.84 $254.34
AMEX Market Value $100.00 $128.22 $129.57 $154.86 $140.75 $177.93
</TABLE>
- ---------------
* The Peer Group is a market-capitalization-weighted stock index combining price
information from 21 banking institutions comprising all such institutions in
Connecticut, New Jersey, and New York with asset size of at least $250
million, but less than $1 billion, as of December 31, 1995, as reported in the
SNL Quarterly Bank Digest of March 1996. The banking institutions included
are: BNH Bancshares, Inc., New Milford Bank & Trust, New England Community
Bancorp, Lafayette American Bancorp and Westport Bancorp, Inc. (CT); Broad
National BanCorporation, B.M.J. Financial Corp., Independence Bancorp,
Carnegie Bancorp, Yardville National Bancorp, and Vista Bancorp (NJ); FNB
Rochester Corp., First of Long Island Corp., State Bancorp, Inc., Tompkins
Country Trust Company, Sterling Bancorp, Suffolk Bancorp, Arrow Financial
Corporation, Evergreen Bancorp, Inc., Hudson Chartered Bancorp and CNB
Financial Corp. (NY).
13
<PAGE> 16
PRINCIPAL SHAREHOLDERS OF THE COMPANY
The following information is furnished with respect to each person known by
management of the Company to be the beneficial owner of more than 5% of the
outstanding shares of Common Stock as of April 8, 1996:
<TABLE>
<CAPTION>
NUMBER OF SHARES
NAME AND ADDRESS AND NATURE OF PERCENT
OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP* OF CLASS
----------------------------------------------------------- --------------------- --------
<S> <C> <C>
Thomas E. Hales (a)........................................ 427,718 14.63
66 Brookwood Drive
Briarcliff Manor, NY 10510
Howard V. Ruderman (b)..................................... 158,323 5.63
6 Aspen Court
Pomona, NY 10970
Harold R. Torsoe (c)....................................... 215,750 7.70
4 Brigitte Court
Suffern, NY 10901
Kenneth J. Torsoe (d)...................................... 296,036 10.54
70 West Gate Road
Suffern, NY 10901
U.S.B. Holding Co., Inc.................................... 275,823 9.84
Employee Stock Ownership Plan With 401(k) Benefits
100 Dutch Hill Road
Orangeburg, NY 10962
</TABLE>
- ---------------
* The table shows all shares as to which each named beneficial owner possessed
sole or shared voting or investment power as of the specified date,
including shares held by, in the name of, or in trust for, the spouse and
dependent children of the named individual and other relatives living in the
same household, even if beneficial ownership of such shares has been
disclaimed by the named individual. Unless otherwise indicated, the named
beneficial owner was the sole and exclusive owner of all listed shares as of
the specified date.
(a) Includes 122,652 shares owned by Mr. Hales jointly with his wife, 36,336
shares owned by his wife, 1,197 shares held by Mr. Hales as custodian for
his grandchildren (Michael T. Shaw, Robert W. Shaw, Christopher Hales
Wilson, and Thomas Prezziosi Wilson), 17,924 shares held by the Hales Family
Foundation, Inc., and 120,040 shares that may be acquired pursuant to the
exercise of options within 60 days of April 8, 1996. Does not include 38,532
or 2,068 shares allocated to Mr. Hales under the KSOP and SEIP,
respectively.
(b) Includes 8,932 shares that may be acquired pursuant to the exercise of
options within 60 days of April 8, 1996.
(c) Includes 468 shares owned by Harold R. Torsoe's son.
(d) Includes 2,499 shares owned by Kenneth J. Torsoe's son, and 6,391 shares
that may be acquired pursuant to the exercise of options within 60 days of
April 8, 1996.
14
<PAGE> 17
CERTAIN RELATIONSHIPS AND TRANSACTIONS WITH MANAGEMENT
During 1995, some of the directors and executive officers of the Company
(and members of their immediate families and corporations, organizations, trusts
and estates with which these individuals are associated) were indebted to the
Bank in amounts of $60,000 or more. However, all such loans, which did not
exceed a total of $813,000 (or 1.56% of shareholders' equity at February 28,
1996) at any one time during 1995, were made in the ordinary course of business,
did not involve more than normal risk of collectibility or present other
unfavorable features, and were made on substantially the same terms, including
interest rate and collateral requirements, as those prevailing at the same time
for comparable loan transactions with unaffiliated persons, and no such loan is
classified at present as a nonaccrual, past due, restructured or potential
problem loan.
Outside of normal customer relationships, none of the directors, executive
officers or 5% shareholders of the Company (or members of their immediate
families) presently maintains, directly or indirectly, any significant business
or personal relationship with the Company or the Bank, other than such as might
arise by virtue of his position with, or ownership interest in, the Company,
except Michael H. Fury, who is a director of the Company and the Bank and is a
partner in the law firm of Fury & Kennedy, which was employed by the Company and
the Bank during 1995 and received $29,500 from the Bank for services rendered
and related out-of-pocket disbursements.
RELATIONSHIP WITH INDEPENDENT AUDITORS
On recommendation of the Examining Committee of the Bank, the Board of
Directors has appointed Deloitte & Touche LLP as independent auditors of the
Company and the Bank, for the year ending December 31, 1996. The appointment of
Deloitte & Touche LLP continues a relationship that began in 1980.
Representatives of Deloitte & Touche LLP are expected to be present at the
Annual Meeting and will have the opportunity to make statements if they so
desire and will be available to respond to appropriate questions.
OTHER MATTERS
The Board of Directors of the Company is not aware of any other matters
that may come before the Meeting. However, the proxies may be voted with
discretionary authority with respect to any other matters that may properly come
before the Meeting.
15
<PAGE> 18
SHAREHOLDER PROPOSALS
Shareholder proposals for inclusion in the proxy statement for the 1997
Annual Meeting of Shareholders must be received by the Company at its principal
executive offices by December 13, 1996. Such shareholder proposals, together
with any supporting statements, should be directed to the Secretary of the
Company.
Date: April 15, 1996
By order of the Board of Directors
/s/ Michael H. Fury
---------------------------
Michael H. Fury, Secretary
16
<PAGE> 19
P R O X Y
U.S.B. HOLDING CO., INC.
100 DUTCH HILL ROAD
ORANGEBURG, NEW YORK 10962
1996 ANNUAL MEETING OF SHAREHOLDERS
This Proxy is Solicited by the Board of Directors of U.S.B. Holding Co.,
Inc., a Delaware corporation (the "Company"). The undersigned shareholder(s)
of the Company hereby appoint(s) Robert F. Picarelli and Alfred L. Fox, and each
or either of them, with full power of substitution and revocation, and hereby
authorize(s) them, and each or either of them, to represent and to vote all
shares of Common Stock of the Company which the undersigned is entitled to vote
at the annual meeting of its shareholders to be held at the Comfort Inn, 425
East Route 59, Nanuet, New York, on Wednesday, May 22, 1996, at 10:00 a.m.
(local time), and at any adjournment thereof, with all powers the undersigned
would possess if personally present as follows:
1. ELECTION OF CLASS II DIRECTORS: FRED F. GRAZIANO, M.D., KENNETH J. TORSOE
/ / FOR the nominees listed (except / / WITHHOLD AUTHORITY to vote
as marked to the contrary below) for all nominees listed
INSTRUCTION: To withhold for one or more nominee(s), write the names(s) of the
nominee(s) in the space below.
- ------------------------------------------------------------------
2. In their discretion, upon such other business as may properly come before
the meeting.
(Continued and to be signed on other side)
<PAGE> 20
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED HEREIN.
IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED FOR MANAGEMENT'S
NOMINEES FOR DIRECTOR ABOVE IN ACCORDANCE WITH THE RECOMMENDATIONS OF THE
COMPANY'S BOARD OF DIRECTORS.
Date _________________, 1996 Signature ______________________
YOU ARE REQUESTED TO MARK, SIGN, DATE AND RETURN THIS PROXY PROMPTLY.
PLEASE SIGN EXACTLY AS NAME APPEARS ON THIS PROXY. ALL JOINT OWNERS MUST
SIGN. PERSONS SIGNING AS EXECUTORS, ADMINISTRATORS, TRUSTEES OR CORPORATE
OFFICERS OR IN OTHER REPRESENTATIVE CAPACITIES SHOULD SO INDICATE.
